Market Report: Still Waiting

From last week's report, the markets have not done much, other that chop and
around, although they did move a little bit higher. My main wave count is
still applicable at this time; I don't see anything at this time to concern
me, although should the markets go on a tear to the upside I will obviously
have to consider my options, but as it stands I still like the idea of a potential
reversal setting up.

Is it time to put on the bear suits? Currently the answer is still a no, although
the potential is there, the trend is still up and must be respected until
we see a breakdown.

I originally targeted the 1480-1500SPX as an area of interest, and we briefly
hit the top end of that range, although the idea is not actually invalid until
its above 1551SPX, although personally I wouldn't want to see this above 1530SPX,
so we still have some room to spare should the market want to squeeze a bit
higher first.

DOW

Last week I mentioned that IBM could give a lift to the DOW and get the DOW
inside its target band, as it was one of the laggards on this advance, well
not only did it boost the DOW, it has pushed up a bit higher than the target
band, so it's gone from laggard to out right leader in a week, so like the
SPX, it's still fine for the idea we have been working, although if we don't
see an aggressive reversal soon then theses ideas are going to run into problems,
but the same applies as the SPX, it's not on a sell, but we are watching for
any key breakdown of support.

Like always we have a clear risk control point, should the market exceed that
area, then we simply accept the idea is invalid and move along to other ideas.

Last week I made an error with the timing of a possible cycle date, I forgot
to allow for trading days only, so we still have an outstanding potential
fibbo timing date, which is still valid and something we are watching, but
first and foremost, price is what we are interested in.

As I pointed out last week, there is a very aggressive bullish wave count
that is technically possible, and if that is to ready to confirm itself, then
it needs to see a strong breakout higher and confirm its intentions on a move
higher above 1600 then onwards to 2000SPX. Whilst it's something that I consider
to be a very low odds setup, the fact remains the bears need to see some sort
of strong downside break, this continual grinding week after week, is not
what the bears want to see.

NDX

Earlier in the week I switched my thoughts to the NDX, as that has been showing
considerable weak price action, and certainly does not appear to have the
power behind it as we have seen on the DOW and SPX, I suspect it's a small
by quiet clue that many traders probably are not watching.

We were watching for a potential ending diagonal setup and its set itself
up just before the AAPL earnings, we had limited risk with the idea via the
NQ futures for those that wanted to trade in Globex, although when trading
ETFS and options you always have the risk of an overnight gap, it's something
that traders have to accept when trading those vehicles.

The AAPL disappointment gave members the chance to sell a bounce in Globex
after the gap down, which I suspect would happen, as generally what happens
after a gap down is the shorts tend to cover and a light bounce is seen before
more downside.

But I was still expecting more downside as the trend in AAPL is clearly down
and will put pressure on the NDX, although many analysts seem to think AAPL
does not matter anyone, I tend to disagree with that statement, AAPL is a
major component of the NDX, if that really starts to crack lower as I expect,
we should see $350 in a short space of time and on its way to my long term
target of $80.

As of Fridays close we still have a setup in the NDX, which I think offers
the better setup, as with this idea we have a clear risk control point at
2769.

With virtually all the setups I post for members I always put the emphasis
on risk control, I think too many analysts dwell on what the potential profits
could be seen and not enough on risk, risk is everything, finding strong,
solid quality ideas takes a special skill, when an analyst can justify the
risk, then I am interested, if they can't or have no clue, I simply brush
any analysis I read these days.

So going into Mondays open I tend to think the NDX has the better setup, as
the SPX has no clarity yet, whereas the NDX has shown us something we can
use and we can control risk which is the important point.

With the SPX chopping around last week, I suggested to members that they look
elsewhere for ideas and when markets are in chop land, I try to suggest to
members to look for ideas where ideas present themselves with clear risk and
objectives.

It should not matter which markets, as long as it's a strong idea I encourage
members and traders alike to move to markets where the ideas has a strong
setup.

AAPL

Talking of AAPL it still seems many bulls are in denial that "my precious" can
actually go lower, when I first posted this chart of a comparison of AAPL
and the NDX, the abuse I got was nothing short of amazing, emails and comments
suggesting I was a tea leaves reader, I was an idiot, I was a prat for suggesting
AAPL can go lower, AAPL can never go down as it's a cash cow, I think I read
every excuse under the sun, some very amusing, it's surprising what a bit
of contrarian analysis can invoke, but then I have seen this behavior many
times before.

When I made my Silver and Gold calls to get out of the precious metals in
2011, I was getting the same sort of message and comments. In fact the more
abuse I get I tend to think it just further confirms my analysis. Without
the abuse I think I would be worried.

Fast forward and things working out as expected, and I still think AAPL could
see lower, however that really is on the basis of seeing a failure to get
back above $490-495, failure to get above that area is a bad sign for the
bulls and if you are an owner of AAPL I would strong suggest you respect any
failure and get out of AAPL.

I don't have any position in AAPL so this is not scare mongering, I warned
many traders on my twitter stream that AAPL was going to crash, as ALL parabolic
blow offs end in tears, but as usual it tends to fall on deaf ears, although
my analysis did save a few members retiree account as they sold AAPL on my
recommendation near $700, that alone was worth the effort of analyzing AAPL.

The price of membership for US market analysis is $20 a month, I guess to
some traders $20 just is not worth saving your accounts, although moving from
$700-450 must hurt if you bought AAPL at the highs, I seem to recall figures
of $900 and $1100 posted, I guess they were not following my work huh!!, never
mind it won't be long before another bubble in a stocks comes along.

Can you afford not to be without quality analysis?

Actually there are a few bubbles in some other stocks we have been following
recently. We have actually started adding some US stocks to the US markets
service; to date we have 22 US stocks that we are following.

That is the current list we had added to the service, that along with daily
analysis of the US markets I suspect makes it a bargain for $20 a month and
you can still try before you buy as that service has a 4 week trial.

With some of the ideas still setting up, I suspect some great ideas are looming.
So if you are an owner of the above mentioned stocks, it might just pay you
to come inside and check out what we have to offer.

ISRG

Another bubble in the making is ISRG, this stock still needs higher, but its
long term idea suggests holders need to be on a high alert and start to look
to take profits regardless of what analysts say.

Remember these were the same guys that were telling you to buy AAPL at $650
and $700 as its going to $1000 right? Wrong they could not care less,
the more stocks you buy the more they get commissions, when was the last time
your broker told you to lock in profits and sell a stock?

Righttttt! I never hear of one, if there is one, congratulations you have
a gem of a broker.

Natural Gas (NG)

One such setup this past week was NG (Natural Gas), I had been looking for
a minor high to NG for a few days and felt it could setup a decent trade short
term. When it dumped, I suspected we could setup a low risk trade to sell
with a stop at $3.64. As long as it stopped around the $3.58-60 area it gave
members a decent trade.

As it stands this turned out to be a nice trade, no matter if you used futures
or CFDs, a nice profit was had with small risk, just the way we like them.
I think it needs a bit lower for a 5th wave, then we could see a small upside
correction, which should offer a setup to sell again, providing we see a 5
wave decline then a corrective bounce, that is a trade that traders can look
to sell, as again we can limit risk as we have a control point.

Staying under the red line suggests a 4th wave then I am expecting a new low,
so we have tight risk control for those still in the trade, as those traders
that are short from near $3.58 already have profits locked in.

If we get the new low, then traders can look to scale out and lock in the
$$ as a bounce is likely to correct any 5 wave decline from $3.64.

Knowing where the idea is wrong is a big issue for me, as without it you are
paddling up a creak without a paddle and that usually means you are going
to run into trouble. If an analyst or trader doesn't know where an idea is
wrong, they are guessing risk control and that is bad news for your account
as emotions can play havoc when things go wrong, and anyone that thinks things
can't go wrong clearly has not traded for a while.

So with a week of chop in the US markets, we still found 2 decent ideas, there
were others as well, in forex as some of the JPY crosses have been seeing
some amazing moves and we are liking the setups that some of those JPY crosses
are showing us, that's something we are watching next week for a trade.

The information written in this article should not be used for any trade recommendation.

www.wavepatterntraders.com accepts
no responsibility for any losses occurred for any results or actions taken
based on the content from this report.

Futures, stocks, Forex and commodity trading carries a high level risk and
may not be suitable for everyone, any readers of this article are STRONGLY
advised to contact a licensed investment advisor before making any financial
decisions.